June Brent crude was down $1.00 to $99.39 a barrel by 1008 GMT, while U.S. crude for June delivery was down 86 cents at $88.33.

The flash HSBC Purchasing Managers' Index for April fell to 50.5 in April from 51.6 a month earlier as new export orders shrank in China.

The PMI's 50-point level divides growth from contraction from the month before. The data followed lower-than-expected GDP growth for China in the first quarter which helped sparked a sharp sell-off last week.

There was also a surprise decline in business activity among German companies, although the overall euro zone services PMI rose slightly and met economists forecasts.

"China and German data disappointed, so it's not a big surprise that oil comes off and the technical picture points to another push lower," Bjarne Schieldrop, an analyst at SEB in Oslo, said.

He cited $99 and $97.60 as levels of support for oil, but said that, in the longer term, current prices presented buying opportunities.

"Seasonal demand is likely to return, and with refineries coming back from maintenance we see now as a good time to get into the market," he said.

Brent settled above $100 on Monday for the first time in five sessions as traders saw oil below the psychological level as a bargain.

The benchmark has fallen 10 percent from about $111 in early April due to concerns about global growth.

The decline has sparked speculation that OPEC could look again at supply at its May 31 meeting although Libya has said it would seek to increase its output quota.

In response to China's moderate growth, Saudi Arabia is expected to keep oil output steady throughout the second quarter after a 700,000 barrels per day (bpd) cut in the last two months of 2012.

At least 26 people were killed on Tuesday when Iraqi forces and Sunni Muslim protesters clashed after troops raided their anti-government demonstration camp near Kirkuk, military sources said.

Later in the day, at least seven people were killed and 17 more wounded when two roadside bombs targeted worshippers as they were leaving a Sunni Muslim mosque in southern Baghdad, police said.

France's embassy in Libya was hit by what appeared to be a car bomb on Tuesday, injuring two guards in the first such attack in the capital Tripoli since the end of the 2011 war that ousted Muammar Gaddafi.

Fighting in Africa's top energy producer Nigeria and a force majeure on its Bonny Light crude exports also helped to put a floor under Brent prices.

The country's oil production is beset by widespread oil theft which forced Royal Dutch Shell to shut its 150,000 bpd Nembe pipeline last week.

Yet supply could rise elsewhere in Africa and the Middle East with the restart of South Sudan's oil production and an easing of European Union sanctions on Syrian crude to allow purchases from the opposition.

Investors will watch weekly oil inventories data from the United States due on Tuesday and Wednesday to gauge demand in the world's largest oil consumer.

U.S. commercial crude oil stockpiles are forecast to have climbed last week on increased imports, and oil products are also seen higher, a preliminary Reuters poll of five analysts showed on Monday. (Additional reporting by Florence Tan in Singapore; Editing by Anthony Barker)